Microsoft to take 30% cut of Metro apps under Windows 8

September 16th, 2011

Daniel Eran Dilger

New Metro-style apps designed to run on Microsoft’s forthcoming Windows 8 for tablets will copy Apple’s App Store business model of charging a 30 percent fee from developers, allowing the potential for Microsoft to regain control over software in segments it has lost to Apple’s iTunes and Google search..
At its BUILD conference with developers, Microsoft has made it clear that while existing Windows 7 desktop apps will continue to move forward in Windows 8 with few changes, the new Metro layer of “touch first” apps that will be targeted at consumers in new PCs and in particular new ARM-based tablets, will be sold through Microsoft’s Windows 8 app store with the same fees Apple charges in both its iOS and Mac App Stores.

Windows 8 = Windows 7 + Metro

Recapping Microsoft’s announcements, Windows bloggers Mary Jo Foley and Paul Thurrott explained that Microsoft said it will allow its enterprise customers to use Windows 8 essentially as a minor update to the existing Windows 7 by turning off the Metro layer via an IT policy across their users.

For consumer PCs, Windows 8 will ship as essentially Windows 7 overlaid with a new layer of Metro animated graphics capable of running new Metro apps. On standard x86 PCs, this will allow users to run both existing Windows apps as well as downloading new Metro apps from Microsoft’s new Windows 8 app market.

On ARM tablets running Windows 8, only the new Metro apps will run, as the president of Microsoft’s Windows unit, Stephen Sinofsky, pointedly clarified earlier this week. While PC makers can continue to sell x86 tablets, these devices, ranging from Tablet PC to UMPCs to Slate PC to convertible notebooks with tablet features, have never sold well in the past due to their performance and efficiency compromises and their significant cost premium over modern ARM tablets.

Ported classic apps not likely on Metro tablets

While it’s technically possible that Microsoft could allow existing Windows 7 apps to be recompiled to run on ARM processors, Microsoft has carefully avoided promising anything along those lines.

Thurrott noted that “months ago they [Microsoft] did an unfortunately confusing demo where they showed an old version of Office running on ARM, which is never going to happen. And I think the reason they did that is because they wanted to say, ‘look, this isn’t [Windows] Compact, Embedded or some other weird thing that looks like Windows, it’s Windows.’ […] That’s actually not going to happen in real life. I don’t know why they did that demo.”

In a statement to blogger Joanna Stern, Mike Anguilo, Microsoft’s vice president of Windows planning said “there is a significant amount of marketing that we are capable of doing that can get through — we can afford to tell a story and tell it long enough and clearly enough. We will make sure it is absolutely clear where your legacy apps will run.”

Stern added that “he followed that up with a kicker: ‘porting things and whether we open native desktop development are either decisions that are either not made or not announced yet.’”

Microsoft now appears to be willfully skirting the question, preferring to leave the decision of whether to support the potential for porting existing Windows apps to ARM tablets in a nebulous, unknown state. However, it is known that today’s x86 apps will simply not run as well on ARM chips, because those chips currently lack the same horsepower and work differently, making the real world migration from the desktop Intel architecture to the mobile ARM architecture far more complex than a simple recompile.

Microsoft has previously supported the ability to deploy Windows XP apps on both Intel x86 and Intel’s Itanium hardware, but porting software titles from one processor architecture to a very different one involves lots of optimization work tied to the design of that architecture, particularly when porting in the direction of a slower, simpler architecture optimized for efficient operation rather than raw speed.

Additionally, the potential possibility for developers to port their Windows apps to ARM doesn’t mean they would, as the dearth of Itanium-compatible Windows apps illustrates. Windows 8 tablet sales would need to justify the porting effort. Apple would be unlikely to be in any rush to port iTunes to Metro, for example, making it more complicated for Windows 8 tablet users to seamlessly use iOS devices with their tablet.

Microsoft needs a Metro app store

Another factor involved with porting classic Windows apps to ARM is that Microsoft does not appear ready to impose the same App Store-like policies (and fees) on classic Windows apps that it plans to require for Metro apps.

Microsoft would be hard pressed to push the entire existing Windows app ecosystem into an app store bottle within the next year, but if it allowed “side loading” of ported, classic apps on new Windows 8 tablets, it would erase the momentum behind the first step of that effort: pushing developers to submit their apps to its new Windows 8 store for at least Metro apps.

Apple similarly didn’t allow developers to port apps to the iPhone or iPad using native Mac Cocoa APIs (or Flash, or Java, or BSD APIs), leaving the iOS App Store as the only option for distributing native apps to iOS users, apart from the open HTML5 web platform. The success of the iOS App Store was then brought to the Mac, where it remains an optional, not compulsory, way to deliver Mac software.

Microsoft has attempted to copy Apple’s iOS App Store before, first with its Marketplace for Windows Mobile, an effort from 2009 that it abandoned within months of requiring developers to modify their apps to fit certain specifications and pay to list them in the store. It then resurrected the store as the Windows Phone 7 Marketplace, this time requiring developers to rewrite their software entirely in Silverlight using the Metro UI.

For the Windows 8 store, Microsoft is asking developers to again rewrite from scratch using a revamped Metro UI and a new web-based development environment. Allowing developers to skirt the store to sell their existing Windows apps to Windows 8 tablet users would defeat the entire premise of delivering the new Metro environment.

Using Metro to push iTunes and other competitors off the PC

Speaking to analysts, Microsoft said it would support the idea of allowing competitors to add their own Metro-style apps to the Windows 8 store, providing examples such as an Amazon Kindle ebook reader or Apple’s iTunes.

If Microsoft refuses to allow existing Windows apps to run on ARM tablets, that would force Apple to convert iTunes to a Metro app and begin paying it a 30 percent cut unless iTunes remained free, if Apple decided it made sense to distribute iTunes on Windows 8 tablets in the first place. Microsoft has not yet spelled out any plans to charge a 30 percent fee on in-app purchases, but such a policy would suddenly become possible on Windows once Microsoft erected its own Apple-like software store.

That strongly suggests Microsoft hopes to use Metro to win back the market for content from iTunes, which rapidly became the most popular media player and store among Windows PC users. By pushing out Metro first as a tablet UI and slowly converting the Windows PC desktop into an app store-only software model, Microsoft could begin to impose far more control over all software sold within the Windows PC environment, something it originally sought to do under Palladium Trusted Computing, an effort that sparked a tremendous backlash given Microsoft’s already dominant position in PCs.

If Microsoft established its own app store for Windows, it could then favor the use of its own services and software, ranging from Windows Media Player to Bing web search, two products that have failed to gain traction in the market, losing to Apple’s iTunes and Google’s search. Unlike Apple, Microsoft’s app store would gain software control over every PC maker globally, leveraging the company’s existing monopoly position of Windows and raising new anticompetitive issues.

but of course the iTunes world is 10x bigger than the XBox/Zune world. and the iOS installed base is 1000x bigger than anything comparable from MS.

so for MS is try and play hardball by holding back Office from iOS in hopes of attacking iTunes is suicide. all it will really do is begin the end of Office’s domination.

but that’s ok with me. go for it Ballmer!

NebulaClash

Note for industry shills: 30% for Apple is a sign of Apple’s evil greed. 30% for Microsoft is a sign of Microsoft’s business sense and a heck of a deal for software developers.

[Exactly. Also, no Flash on the iPad means Steve Jobs carries a petty grudge against Adobe, while no potential for Flash plugins on Windows 8 tablets is all about security, stability and the open web, all those things Jobs lied about. - Dan]

gctwnl

I’m confused. Isn’t Apple moving to disconnect the Post-PC devices from the PC (and Mac) by moving to the Cloud? If that happens, what incentive does Apple have to support access to their store & cloud on hardware from the competition? On the desktop PC (which is abundant): yes. But on tablets and other Post-PC devices?

If Apple successfully disconnects iOS content from Mac OS X and Windows, and Microsoft successfully establishes a Win App Store for Windows 8 desktops, you will either have your content in Apple’s cloud on Apple’s devices or in Microsoft’s cloud on Win8 devices.

spidouz

From the Apple point of view, all they need to do is to release iPod with WiFi features (the iPod Touch already has it, now we only need the smaller ones too)… and then sync with iCloud to your main iTunes account… even without the need to plug your iPod to your Windows work machine…

What’s wrong with Microsoft is all efforts they put to apply Apple formulas that work to Apple to their own environment which is different from Apple environment. Instead, they should put some effort to figure out their own formulas…

hi.wreck

The assumption of the Metro pricing model is that people actually like the metro interface. The geeks do, but the lackluster sales of Win Phone 7 tends to indicate the real world begs to differ.

John E

@ wreck: i agree with you.

but the response from MS fans will be that is because right now WP7 is an isolated new UI idea (Mango) on a low-sales product line that admittedly came to the market two years late, after iOS and Android got a huge head start. whereas once Mango is the up front UI for the dominant standard (newest) computer OS, Windows 8, with its much expanded Windows Live cloud tying everything together, that will end WP7′s isolation and consumers will get used to it, even love it, and so then they will want it on their tablets and phones too, and so they will all take off together and be a big hit.

that’s the theory.

one obvious problem with that theory is, by the time actually W8 comes to market at scale in 2013 (or later), it will again be two years behind the head starts of OS Lion/iCloud and Chrome OS. we’ll be using iOS 6 on iPad 4.

what i noticed in the videos was how similar Mango really is to iOS/Android. those tiles are just bigger icons with bright colors instead of graphics. the live updating and content theming is just a widget (which iOS doesn’t have exactly, but Android does). it is not some dramatic UI advancement (like total “hands free & smart” voice control of everything a la Starship Enterprise, for example, coming pretty soon i think).

MS/Mango is skating to where the puck is in 2011, not where it will be in 2013.

http://berendschotanus.com Berend Schotanus

Microsoft is implementing the new UI paradigm as a skin upon their existing product. They have done that before, like:

MS-DOS + Macintosh = Windows

So now we get:

Windows + iPad = Metro

Then, like now, the main criticism was a skin is not the “real thing” and providing backward compatibility leads to all kinds of undesirable design compromises. But that’s the perspective of the end-user which might not be the only relevant perspective.

Most decision makers for hardware/software purchase are wary of leaving their installed base. They get the new skin as a side effect of an update they make for different reasons. No business board ever approved a MS-DOS to Windows transition. The GUI just happened to be there some day and then end-users were happy to use it.

What Microsoft is really doing (and should be doing): they are leveraging their installed base to create a large and attractive market for software developers who want to embrace the new UI paradigm. This is not about an early adopter or critical end-user market. This is about a vast market of end-users who are dependent upon decision makers who think a desktop to tablet transition might be perfectly suitable to them somewhere by 2025… And then all of a sudden these end-users can be reached with exciting touch based software in 2013 or 2014!

John E

sorry, Berend, there is just no “new UI paradigm” in Metro. as i posted above you, it is just a re-arrangement of the current state of the art. that may prove a market success, but innovation it is not.

you want to read about a genuine “new UI paradigm”? here you to, i found this post just after i did that comment:

I had a look at the “Windows Weekly” video linked in the article and had to laugh when at 2 min 48sec the vision accidentally switches to a Mac OSX desktop. Imagine the shock-horror scandal if “Windows Weekly” was produced on Mac OS!

http://berendschotanus.com Berend Schotanus

@John E
“there is just no “new UI paradigm” in Metro”

The new UI paradigm is in iOS. It is the accomplishment of Steve Jobs and his team to have re-arranged “current state of the art” graphics and animations in such a way that it really worked for handheld touch devices. Something Microsoft didn’t manage to do by themselves.

Metro is “yet another iOS offspring”, not very different from webOS or Android. I wasn’t trying to say that Metro is suddenly transforming Microsoft into an innovative company. I was trying to say that Microsoft is in a position where just being a dedicated follower of fashion might be good enough.

gctwnl

@scottkrk: which episode is that? The 226 episode is less than 2min long.

John E

@ berend: ok, yes! i took your first sentence the wrong way.

MS’ unique approach is to apply its Metro top level UI and Live cloud to all its OS software of any kind and the the hardware they run, no matter how different they are underneath. (but they might leave their bread-and-butter enterprise software as it is, they didn’t say, we’ll have to see).

(1) on the desktop side, will that be anything more than new eye candy for the Start Menu laid on top of Win 7? plus a reworking of all system menus to make them touch UI friendly – even if users still prefer to use a mouse at their desk? (i really like my magic mouse). and to be enhanced with a new class of Metro desktop applications that can use touch UI? priced cheap like Windows today, i assume, but with how many tiers?

(2) on the laptop side, same question, but assuming we will see OEM’s try to sell laptops with touch screens too? priced higher?

(3) on the “slate” side, will we see OEM’s try to sell x86 tablets running “full W8″ that can run both legacy Windows applications, like MS has been trying to push for 10 years, and also the new class of Metro apps with both their desktop and a reworked tablet variants? priced high?

(4) and on the tablet side, we know we will see OEM’s try to sell ARM tablets running just the Metro W8 that can’t run legacy Windows applications, but will run the new class of Metro apps with both desktop and tablet variants. priced cheap?

(5) on the WinPhone side, will its current WP7 apps run at all on the new WP8? and/or will a variant of new Metro tablet apps run at all on WP8?

and on the XBox side …?

phew!

i think this is all so complicated that:

(a) MS can never get it finished fully and to market at scale until 2013 (and its competition will have moved ahead another software cycle or two by then).

(b) consumers will be slow to switch to it for desktops and laptops, will not be very interested in the tablets (too late to the party), plus almost no one wants a slate.

(c) enterprise will reject it outright and stick with W7.

(d) so it will mainly be limited to sales of new consumer hardware, which will take several years to overtake W7 in total-in-use for consumers, and never for enterprise.

so … i don’t think this strategy will be “good enough.” i think it is a scatter-gun mess.

but Windows 9 will clean it up, like W7 cleaned up Vista. in 2015.

John E

whereas, Apple’s approach …

- the underlying OS’ are actually two versions of the same OS X.

- but their top level UI’s are customized for dektop/laptop UI on one hand and mobile hardware UI on the other. so they are quite different, but much of their “logic” is similar – that feeling of “Mac-ness.”

- the new iCloud will be found by users mainly at the application/app level to make the workflow and media flow back and forth among both desktop and mobile software seamless – it won’t matter. Mobile Me’s system level items’ syncing is being dropped.

- the 2012 Apple software updates will further consolidate and extend all this before W8 comes to market (e.g., maybe Apple will enable iOS apps to run on the desktop OS to replace widgets).

- it will Just Work.

we’ll see how consumers react.

http://berendschotanus.com Berend Schotanus

@John E
You are absolutely right, there are lots of considerations to make. When watching Jensen Harris’ Build-keynote on video, I was amazed by the iPad resemblance. And not only in a superficial “Asian copycat” style, Harris seems to have a thorough in-depth understanding of what’s going on in Apples success model. That’s how the “MS-DOS to Win95″ transition analogy came to my mind.

Some further considerations:
(1) On a technical level I think it’s less complicated than we try to make it. As I see it, it is like Apple would add the iPad simulator to its default OS-X and brand it as a new version. It has always been possible (for development purposes) to compile iOS apps to x86 architecture.

(3) Besides eye-candy the Metro desktop involves an enormous simplification. Whether customers can appreciate this really depends upon the purpose with which they are using their computer. Power users who want to go to the bottom with their pro photoshop or spreadsheet programs will no doubt return to the classic desktop immediately.

(4) Porting Office to the Metro UI will be mandatory for Microsoft. With the iPad version of iWork Apple showed such a move is possible.

(5) When Windows 95 was introduced, all MS-DOS applications were replaced by Windows applications really quickly. If such an optimistic scenario happens to Metro, the new hardware will be all ARM tablets, maybe with some keyboards and docking stations to fit them in an office environment.

(6) In a success scenario for Microsoft, 95% of users might switch to the Metro UI, while 5% power users will stick to the old desktop. Microsoft could then very well decide they need two different OS’es after all, one for tablet, one for desktop.

(7) I fully agree with you the proof will be in consumer reaction. Will a majority of consumers be happy to type their emails and business reports in a tablet style UI, even when it runs on a full scale PC with keyboard and mouse? Or will they quickly ignore and forget, like they once did with Windows Media Center Edition?

berult

One can rationalize Microsoft’s shadowy Universe with rhetorically retro-fitted glories and romanticized tenures of a bygone tech era …to a bleeding heart’s content. Pretty soon, …if not already, when the dynamics of | i |-OS-| X | ecosystem’s development carries forward to an irreversibility threshold, the market will routinely strike presumptions down with disarming candor and echoing finality…
…and indeed, as we witnessed recently, make Brand marketing all the more potent …for it being integrally encoded in grounded reality…

Is it an iPhone!? If it’s not an iPhone …it’s not an iPhone…
Is it an iPad!? If it’s not an iPad …it’s not an iPad…
Is it a MacBook Air!? If it’s not a MacBook Air …well… it’s not a MacBook Air is it!?

What day then will their bosom carry, …them specs…?

Shall we envision a Microsoft future of either fate altering, copyrighted, paradigm shifting creativity -a first dare I say in the Company’s artistic log-,
or death by a thousand cut…-and-dried tautologies…?

twujr

I don’t think I will get any flack with my unabashed (and completely lacking of any shame) admission that I am a truck driver… and I drive a really big truck: a MacPro 3,1 with a 4TB raid on the inside, three flat panels (carryovers from my PC days: one Dell 30″ and two Dell 20″), 16gb RAM and an SSD for the boot drive coming in the next day or so (even though I’m not convinced it will launch apps too much faster than my RAID does).

However, I tea lye joy taking the sports car out on weekends. I can’t snuggle up with the MacPro, nor my hot-rodded 17″ MBP.

For the foreseeable future I will continue to split my time between driving my big rig and enjoying my sports car, which gets real-world business use with Keynote presentations that occasionally are too complex for a Gen 1 iPad.

When I look at the cutesy attempts W8 is striving towards, I wonder how many additional people will gravitate to a platform with a higher initial cost of acquisition and a significantly lower TCO.

Ludor

Okay, so a Mac Pro is a truck. MBP is a sports car. iPad is a… motorcycle? iPhone is, say, a scooter?

Then a W8 tablet is one of those power-assisted, training wheels, gps-compass-odometer-radio tacked-on, heavy as shit, retired citizen’s bicycles.

ScottNY

Let’s say Apple ports iTunes to Metro and distributes it for free in the Metro “app store” and Microsoft decides to charge a 30% fee for in-app purchases, then wouldn’t any music, movies, TV shows and apps sold through iTunes Metro have to pay Microsoft a 30% cut before Apple takes its cut?

You could say that Apple doesn’t and wouldn’t use Microsoft’s in-app purchase mechanism since it has all those iTunes accounts so the rules wouldn’t apply, but Microsoft could “pull an Apple” and force Metro apps to use its in-app purchase mechanism or ban it from its app store.

Does Apple allow apps to purchase content without paying its cut? Does Apple allow apps to utilize content in an app that is purchased outside of the app? Yes, but with restrictions. Would Apple allow an iTunes-like app on its App Store without serious modifications to how purchases are handled in its various iterations (desktop, iPad, iPhone, iPod)?